Microsoft avoids paying £100m a year in UK corporation tax

Microsoft sent more than £8 billion of revenues to Ireland since 2011

Corporation tax in Ireland currently stands at 12.5 per cent, while the UK has a corporation tax rate of 20 per cent (Getty)

Microsoft has reportedly avoided up to £100m a year in UK corporation tax by routing its sales through Ireland.

The corporation has sent more than £8bn of revenues from computers and software bought by British customers to Ireland since 2011, as part of a deal with HM Revenue & Customs (HMRC), the Sunday Times reports.

The arrangements, known as advance pricing agreements, agree on the allocation of profit between various countries.

HMRC approved Microsoft's offshore structure in 2012, in a deal which runs from 2011 to 2017.

Corporation tax in Ireland currently stands at 12.5 per cent, while the UK has a corporation tax rate of 20 per cent.

More than 140 tax deals have been arranged between HMRC and some of the world's biggest companies, the Sunday Times investigation found.

Advance pricing agreements are now being investigated across Europe by the European Commission, which wants to ensure they do not breach rules on state aid.

A spokesperson for HMRC said: “No company will pay a single penny less in tax because of Advance Payments Agreements.

"These simply set out how the tax rules will apply on complex transactions ahead of time and we keep them under constant review.”

Earlier this year, Facebook agreed to pay millions of pounds in tax after years of criticism of the company funnelling profits through Ireland and paying just £4,327 in tax in 2014, despite an annual profit of £1.9bn.